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Recently, Smith & Nephew Inc (SNN - Snapshot Report) launched its Journey II Bi-Cruciate Stabilized (BCS) knee replacement at the American Academy of Orthopaedic Surgeons (AAOS) meeting in Chicago.

Smith & Nephew had earlier won the European CE Mark approval for its Journey II BCS knee replacement in 2012. The company also initiated a limited market release of the product that year.

The Journey II BCS knee incorporates Smith & Nephew’s VERILAST Technology. The Journey II BCS knee comprises two wear reducing materials – the company’s proprietary OXINIUM alloy along with a highly-cross-linked plastic liner. This in turn reduces concerns associated with implant wear versus other regular bearing couples available in the market.

The Journey II BCS knee replicates the knee joint’s hard surfaces and the usual friction of the soft tissues, ensuring natural motion for the patient. Considering that wear performance and fit are the major concerns for knee replacement, Smith & Nephew should gain a competitive edge in the market with this product.

According to Smith & Nephew, Journey II BCS knee is designed to improve standard of care. This was made possible with the use of the advanced LifeMOD human simulation software which was included in Smith & Nephew’s portfolio following the acquisition of LifeModeler in 2012.  

Despite the recent economic pressure and dragging sales, the company’s knee implant business remains its mainstay. Smith & Nephew’s consistent focus on the knee implant franchise is encouraging. We believe that portfolio extension on the back of innovation should provide resilience in a low growth environment.

We also note Smith & Nephew’s increasing focus on the Advanced Wound Management division, away from the clouded orthopaedic space, should leverage top-line. Its acquisition of Healthpoint Biotherapeutics in 2012 is a strategic fit and an important step toward creating a strong position in bioactives, the fastest growing area in Advanced Wound Management.

The stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for Smith & Nephew, other stocks in the medical devices space such as Conceptus , Hanger (HGR - Analyst Report) and CareFusion (CFN - Analyst Report) warrant a look. These stocks carry a Zacks Rank #2 (Buy).

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